# ASC 842-30: Leases — Lessor Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/842/30/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:57:05.183Z to 2026-09-10T01:57:33.589Z Record version: sha256:45809e91fd413b27172b3c4c09edacbf1da5c137c45fd0ee7c3c06fc04d99a8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30: Leases — Lessor ### Machine-generated study aids ```json { "summary": "ASC 842-30 governs how lessors account for leases already classified under 842-10 as sales-type, direct financing, or operating leases. For sales-type and direct financing leases the lessor derecognizes the underlying asset and recognizes a net investment in the lease (lease receivable plus unguaranteed residual asset, discounted at the rate implicit in the lease), with selling profit recognized immediately in a sales-type lease but deferred into the net investment in a direct financing lease; interest income then accretes at a constant periodic rate. For operating leases the lessor keeps the asset on its books and recognizes lease payments as income straight-line (or another systematic and rational basis) over the lease term, and a collectibility-not-probable assessment overrides normal recognition in all three models.", "key_points": [ "At commencement of a sales-type lease the lessor recognizes a net investment in the lease and selling profit or loss and derecognizes the underlying asset (842-30-25-1, 842-30-40-1); initial direct costs are expensed if the underlying asset's fair value differs from its carrying amount, and otherwise deferred into the net investment (842-30-25-1(c)).", "The net investment equals the lease receivable—present value of unreceived lease payments plus any residual value guaranteed by the lessee or an unrelated third party—plus the unguaranteed residual asset, both discounted at the rate implicit in the lease (842-30-30-1); for a direct financing lease that amount is reduced by any selling profit, which is deferred along with initial direct costs (842-30-30-2, 842-30-25-8).", "After commencement the lessor accretes interest income at a constant periodic discount rate on the remaining net investment, reduces it for payments collected, does not remeasure absent a modification not accounted for as a separate contract, and records a loss allowance under Subtopic 326-20 considering the collateral (842-30-35-1 through 35-3).", "If collectibility of the lease payments plus any lessee residual value guarantee is not probable at commencement, the lessor does not derecognize the asset and records payments received as a deposit liability until collectibility becomes probable or the contract is terminated/asset repossessed with nonrefundable payments (842-30-25-3); on becoming probable the lessor derecognizes the asset and deposit liability and recognizes a net investment and selling profit or loss (842-30-25-4).", "If collectibility is probable at commencement for a sales-type or direct financing lease, it is not reassessed; later credit deterioration is handled through the 326-20 loss allowance (842-30-25-6).", "For operating leases the lessor defers initial direct costs and recognizes lease payments as income straight-line (or another systematic and rational basis), variable lease payments when the triggering facts occur, and initial direct costs as expense on the same basis as lease income (842-30-25-10 through 25-11); if collectibility is not probable, income is capped at cash collected (842-30-25-12) with a current-period catch-up adjustment when the assessment changes (842-30-25-13).", "Presentation and disclosure: net investment in sales-type and direct financing leases is presented separately from other assets (842-30-45-1), commencement-date profit or loss is presented in a manner reflecting the lessor's business model (gross revenue/COGS or a single net line item) (842-30-45-4), lease cash receipts are operating activities (842-30-45-5), and lessors must give tabular lease income, net investment components, residual risk management, and separate five-year maturity analyses for finance and operating leases (842-30-50-5 through 50-12)." ], "categories": [ "Leases", "Recognition", "Subsequent measurement", "Disclosure" ], "audience_level": "intermediate", "student_note": "The classic exam traps are (1) selling profit is recognized immediately in a sales-type lease but deferred into the net investment in a direct financing lease, and (2) initial direct costs are expensed only when fair value ≠ carrying amount of the underlying asset. Also remember the collectibility gate: if collection is not probable at commencement, the lessor keeps the asset and books cash received as a deposit liability (or, for operating leases, caps income at cash collected).", "related_topics": [ "842-10", "842-20", "842-40", "326-20", "360-10", "606" ], "key_concepts": [ "net investment in the lease", "lease receivable", "unguaranteed residual asset", "selling profit or loss", "rate implicit in the lease", "collectibility probable assessment", "deposit liability", "initial direct costs" ] } ``` Source downloaded (UTC): 2026-09-10T01:57:05.183Z to 2026-09-10T01:57:05.183Z Record version: sha256:9332fb7934ff5fc9f8083aef7257cd1f3157689653d144ecfef6659c02ba660b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/842/30/#00-status) SEC content: no ##### [842-30-00-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:05.183Z to 2026-09-10T01:57:05.183Z Record version: sha256:df47ab88ad203b1791cc194ab4363266703ecb74ec21ef0ee4c51fcdf45c56b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Fair Value (2nd def.)AddedAccounting Standards Update No. 2016-0202/25/2016
Finance LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Initial Direct CostsAddedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ReceivableAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Market ParticipantsAddedAccounting Standards Update No. 2016-0202/25/2016
Net Investment in the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Operating LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Orderly TransactionAddedAccounting Standards Update No. 2016-0202/25/2016
Probable (2nd def.)AddedAccounting Standards Update No. 2016-0202/25/2016
Rate Implicit in the LeaseAmendedAccounting Standards Update No. 2018-1007/18/2018
Rate Implicit in the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Related PartiesAddedAccounting Standards Update No. 2016-0202/25/2016
Residual Value GuaranteeAddedAccounting Standards Update No. 2016-0202/25/2016
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Selling Profit or Selling LossAddedAccounting Standards Update No. 2016-0202/25/2016
SubleaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Unguaranteed Residual AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Useful LifeAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
842-30-05-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-15-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-25-1 through 25-14
AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-25-2AmendedAccounting Standards Update No. 2016-1306/16/2016
842-30-25-6AmendedAccounting Standards Update No. 2016-1306/16/2016
842-30-25-9AmendedAccounting Standards Update No. 2016-1306/16/2016
842-30-30-1 through 30-4
AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-35-1 through 35-7
AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-35-3AmendedAccounting Standards Update No. 2018-1007/18/2018
842-30-35-3AmendedAccounting Standards Update No. 2016-1306/16/2016
842-30-35-4AmendedAccounting Standards Update No. 2018-1007/18/2018
842-30-40-1 through 40-4
AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-40-2AmendedAccounting Standards Update No. 2016-1306/16/2016
842-30-45-1 through 45-7
AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-45-5AmendedAccounting Standards Update No. 2019-0103/05/2019
842-30-50-1 through 50-13
AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-50-3AmendedAccounting Standards Update No. 2018-1107/30/2018
842-30-50-3AAddedAccounting Standards Update No. 2018-1107/30/2018
842-30-50-14AddedAccounting Standards Update No. 2018-2012/10/2018
842-30-55-1 through 55-43
AddedAccounting Standards Update No. 2016-0202/25/2016
842-30-55-17AAddedAccounting Standards Update No. 2019-0103/05/2019
842-30-55-20AmendedAccounting Standards Update No. 2018-1007/18/2018
842-30-55-32AmendedAccounting Standards Update No. 2018-1007/18/2018
842-30-55-32AAddedAccounting Standards Update No. 2018-1007/18/2018
Source downloaded (UTC): 2026-09-10T01:57:08.661Z to 2026-09-10T01:57:08.661Z Record version: sha256:afde6639c10939d3ca4871ddc27e0f695165280bf881f7b51850d6a0fff9636f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/842/30/#05-overview-and-background) SEC content: no ##### [842-30-05-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:08.661Z to 2026-09-10T01:57:08.661Z Record version: sha256:83a92dc3b8392c8cd0b2920e0124599330ff1c513dfeae9eff97a506424df901 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses accounting by [lessors](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") for [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") that have been classified as [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A."), [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."), or [operating leases](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") in accordance with the requirements in Subtopic 842-10. Lessors should follow the requirements in this Subtopic as well as those in Subtopic 842-10. Source downloaded (UTC): 2026-09-10T01:57:10.893Z to 2026-09-10T01:57:10.893Z Record version: sha256:061ad40ad4046a5689182bd4071403bb458eb9fe0df11a0711f7b000773cec63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/842/30/#15-scope-and-scope-exceptions) SEC content: no ##### [842-30-15-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:10.893Z to 2026-09-10T01:57:10.893Z Record version: sha256:4b374b43a5270f44b475c35796ba3b5a2d9f2ec7846501995475670f2469e95e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic; see Section 842-10-15. Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:10ee5c2336028bcc1a0125cc2892596ad2bc39d3b30b7788f66ab1920c4962d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/842/30/#25-recognition) SEC content: no #### Sales-Type Leases ##### [842-30-25-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:b0005268baf2a54e73511e0584f506fd9e6ba2f6cddad050931a0ab5a1604879 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall recognize each of the following and derecognize the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") in accordance with paragraph [842-30-40-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-1): 1. a A [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit."), measured in accordance with paragraph [842-30-30-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-1) 2. b [Selling profit or selling loss](https://asc.understandingaccounting.org/glossary/s/#selling-profit-or-selling-loss "At the commencement date, selling profit or selling loss equals: The fair value of the underlying asset or the sum of (1) the lease receivable and (2) any lease payments prepaid by the lessee, if lower; minus The carrying amount of the underlying asset net of any unguaranteed residual asset; minus Any deferred initial direct costs of the lessor.") arising from the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") 3. c [Initial direct costs](https://asc.understandingaccounting.org/glossary/i/#initial-direct-costs "Incremental costs of a lease that would not have been incurred if the lease had not been obtained.") as an expense if, at the commencement date, the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the underlying asset is different from its carrying amount. If the fair value of the underlying asset equals its carrying amount, initial direct costs (see paragraphs [842-10-30-9 through 30-10](https://asc.understandingaccounting.org/asc/842/10/#842-10-30-9) ) are deferred at the commencement date and included in the measurement of the net investment in the lease. The [rate implicit in the lease](https://asc.understandingaccounting.org/glossary/r/#rate-implicit-in-the-lease "The rate of interest that, at a given date, causes the aggregate present value of (a) the lease paymentsand (b) the amount that a lessor expects to derive from the underlying asset following the end of the lease termto equal the sum of (1) the fair value of the underlying asset minus any related investment tax credit retained and expected to be realized by the lessor and (2) any deferred initial direct costs of the lessor. However, if the rate determined in accordance with the preceding sentence is less than zero, a rate implicit in the lease of zero shall be used.") is defined in such a way that those initial direct costs eligible for deferral are included automatically in the net investment in the lease; there is no need to add them separately. ##### [842-30-25-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:30b9d42145d91288f26650a62ff7ad6281e1d6df16972e1ad11b99cf2c113ef5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the commencement date, a lessor shall recognize all of the following: 1. a Interest income on the net investment in the lease, measured in accordance with paragraph [842-30-35-1(a)](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-1) 2. b [Variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.") that are not included in the net investment in the lease as income in profit or loss in the period when the changes in facts and circumstances on which the variable lease payments are based occur 3. c Credit losses on the net investment in the lease (as described in paragraph [842-30-35-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-3)). ##### [842-30-25-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:b9167c5db3343a6ff06c3490f1868437a97860e7805d6435e5a9c50985be56d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [842-30-25-1 through 25-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-1) notwithstanding, if collectibility of the [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor."), plus any amount necessary to satisfy a [residual value guarantee](https://asc.understandingaccounting.org/glossary/r/#residual-value-guarantee "A guarantee made to a lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount.") provided by the [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration."), is not [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") at the commencement date, the lessor shall not derecognize the underlying asset but shall recognize lease payments received—including variable lease payments—as a deposit liability until the earlier of either of the following: 1. a Collectibility of the lease payments, plus any amount necessary to satisfy a residual value guarantee provided by the lessee, becomes probable. If collectibility is not probable at the commencement date, a lessor shall continue to assess collectibility to determine whether the lease payments and any amount necessary to satisfy a residual value guarantee are probable of collection. 2. b Either of the following events occurs: 1. 1 The [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") has been terminated, and the lease payments received from the lessee are nonrefundable. 2. 2 The lessor has repossessed the underlying asset, it has no further obligation under the contract to the lessee, and the lease payments received from the lessee are nonrefundable. ##### [842-30-25-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:a5df04e7f5ca20f9fed9938ddf3564a3bda0540b8a1bfdbcbb8776d76400f158 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When collectibility is not probable at the commencement date, at the date the criterion in paragraph [842-30-25-3(a)](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3) is met (that is, the date at which collectibility of the lease payments plus any amount necessary to satisfy a residual value guarantee provided by the lessee is assessed as probable), the lessor shall do all of the following: 1. a Derecognize the carrying amount of the underlying asset 2. b Derecognize the carrying amount of any deposit liability recognized in accordance with paragraph [842-30-25-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3) 3. c Recognize a net investment in the lease on the basis of the remaining lease payments and remaining [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."), using the rate implicit in the lease determined at the commencement date 4. d Recognize selling profit or selling loss calculated as: 1. 1 The [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."); plus 2. 2 The carrying amount of the deposit liability; minus 3. 3 The carrying amount of the underlying asset, net of the [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."). ##### [842-30-25-5](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:1b5c1fe1c6b5b80a2e280031bdc6e1e193d6d0488873b7be5b9f3b30d27b23b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When collectibility is not probable at the commencement date, at the date the criterion in paragraph [842-30-25-3(b)](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3) is met, the lessor shall derecognize the carrying amount of any deposit liability recognized in accordance with paragraph [842-30-25-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3), with the corresponding amount recognized as lease income. ##### [842-30-25-6](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:bf981b2c2ed4eaa9ea52a7edeca30fba49b35647ad596b799498aaf3188dd7d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If collectibility is probable at the commencement date for a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or for a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."), a lessor shall not reassess whether collectibility is probable. Subsequent changes in the credit risk of the lessee shall be accounted for in accordance with the credit loss guidance applicable to the net investment in the lease in paragraph [842-30-35-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-3). #### Direct Financing Leases ##### [842-30-25-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:679c394e5a76d23bd8d704fbd06b56401945cdb5f0d55e279b56f3b5c67bb8fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall recognize both of the following and derecognize the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") in accordance with paragraph [842-30-40-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-1): 1. a A [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit."), measured in accordance with paragraph [842-30-30-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-2) 2. b Selling loss arising from the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."), if applicable. ##### [842-30-25-8](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:dc5709d56cc344ed7e84df89044e2c450e531a10d0a990af8c9ded85bf3b7339 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Selling profit and [initial direct costs](https://asc.understandingaccounting.org/glossary/i/#initial-direct-costs "Incremental costs of a lease that would not have been incurred if the lease had not been obtained.") (see paragraphs [842-10-30-9 through 30-10](https://asc.understandingaccounting.org/asc/842/10/#842-10-30-9) ) are deferred at the commencement date and included in the measurement of the net investment in the lease. The [rate implicit in the lease](https://asc.understandingaccounting.org/glossary/r/#rate-implicit-in-the-lease "The rate of interest that, at a given date, causes the aggregate present value of (a) the lease paymentsand (b) the amount that a lessor expects to derive from the underlying asset following the end of the lease termto equal the sum of (1) the fair value of the underlying asset minus any related investment tax credit retained and expected to be realized by the lessor and (2) any deferred initial direct costs of the lessor. However, if the rate determined in accordance with the preceding sentence is less than zero, a rate implicit in the lease of zero shall be used.") is defined in such a way that initial direct costs deferred in accordance with this paragraph are included automatically in the net investment in the lease; there is no need to add them separately. ##### [842-30-25-9](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:2c7d4c939c7fb9f58546ad238f227ef347ee00af4e7384e3bc7c4accc448dbeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the commencement date, a lessor shall recognize all of the following: 1. a Interest income on the net investment in the lease, measured in accordance with paragraph [842-30-35-1(a)](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-1) 2. b [Variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.") that are not included in the net investment in the lease as income in profit or loss in the period when the changes in facts and circumstances on which the variable lease payments are based occur 3. c Credit losses on the net investment in the lease (as described in paragraph [842-30-35-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-3)). #### Operating Leases ##### [842-30-25-10](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:a585f14cbe0628fafaf182a7cf890e8ec8b57fa2fa816091ea01f9f3b3deccd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall defer [initial direct costs](https://asc.understandingaccounting.org/glossary/i/#initial-direct-costs "Incremental costs of a lease that would not have been incurred if the lease had not been obtained."). ##### [842-30-25-11](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:7e1198e9aeb733fd963bc9f2cf868c7daaf8e5919e1284d3686cb8ab3ac3216a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the commencement date, a lessor shall recognize all of the following: 1. a The [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") as income in profit or loss over the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which benefit is expected to be derived from the use of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset."), subject to paragraph [842-30-25-12](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-12) 2. b [Variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.") as income in profit or loss in the period in which the changes in facts and circumstances on which the variable lease payments are based occur 3. c Initial direct costs as an expense over the lease term on the same basis as lease income (as described in (a)). ##### [842-30-25-12](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:8da8263f8586ef298a519084602d0796ca84d3a273e710a43fcf0ef9d9938a38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If collectibility of the lease payments plus any amount necessary to satisfy a [residual value guarantee](https://asc.understandingaccounting.org/glossary/r/#residual-value-guarantee "A guarantee made to a lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount.") (provided by the [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") or any other unrelated third party) is not [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") at the commencement date, lease income shall be limited to the lesser of the income that would be recognized in accordance with paragraph [842-30-25-11(a) through (b)](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-11) or the lease payments, including variable lease payments, that have been collected from the lessee. ##### [842-30-25-13](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:e68488c411ce898c60db4390ff88cbdeded67e83f8fe86e7f71193758b8049d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the assessment of collectibility changes after the commencement date, any difference between the lease income that would have been recognized in accordance with paragraph [842-30-25-11(a) through (b)](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-11) and the lease payments, including variable lease payments, that have been collected from the lessee shall be recognized as a current-period adjustment to lease income. ##### [842-30-25-14](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:15.916Z to 2026-09-10T01:57:15.916Z Record version: sha256:5d79ab7aabe69c6844d9eef26073858e7a842b3ad69ba3086c3473a62c8d09de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraphs [842-30-55-18 through 55-43](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-18) ) for an illustration of the requirements when collectibility is not probable. Source downloaded (UTC): 2026-09-10T01:57:17.907Z to 2026-09-10T01:57:17.907Z Record version: sha256:afa93cdb7c709be1d252d885e5d344a37cd15927c2f0e633e387b058ccf22756 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/842/30/#30-initial-measurement) SEC content: no #### Sales-Type and Direct Financing Leases ##### [842-30-30-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:17.907Z to 2026-09-10T01:57:17.907Z Record version: sha256:325ad66519be2348c75494e5ab244db51b86e3152f858acddf034c27e8f847ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date."), for a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall measure the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") to include both of the following: 1. a The [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."), which is measured at the present value, discounted using the [rate implicit in the lease](https://asc.understandingaccounting.org/glossary/r/#rate-implicit-in-the-lease "The rate of interest that, at a given date, causes the aggregate present value of (a) the lease paymentsand (b) the amount that a lessor expects to derive from the underlying asset following the end of the lease termto equal the sum of (1) the fair value of the underlying asset minus any related investment tax credit retained and expected to be realized by the lessor and (2) any deferred initial direct costs of the lessor. However, if the rate determined in accordance with the preceding sentence is less than zero, a rate implicit in the lease of zero shall be used."), of: 1. 1 The [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") (as described in paragraph [842-10-30-5](https://asc.understandingaccounting.org/asc/842/10/#842-10-30-5)) not yet received by the lessor 2. 2 The amount the lessor expects to derive from the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") following the end of the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") that is guaranteed by the [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") or any other third party unrelated to the lessor 2. b The [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") at the present value of the amount the lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, discounted using the rate implicit in the lease. ##### [842-30-30-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:17.907Z to 2026-09-10T01:57:17.907Z Record version: sha256:5e31631db101543fdd17f2a073e5c83542078bbea8bbaca65c45830d59d29b79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the commencement date, for a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."), a lessor shall measure the net investment in the lease to include the items in paragraph [842-30-30-1(a) through (b)](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-1), reduced by the amount of any selling profit. ##### [842-30-30-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:17.907Z to 2026-09-10T01:57:17.907Z Record version: sha256:99b3f89555d539a04977dff8618d97b40822b2bafea1fe136ffaa059a0e03494 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraphs [842-30-55-18 through 55-43](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-18) ) for an illustration of the requirements for sales-type and direct financing leases. #### Operating Leases ##### [842-30-30-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:17.907Z to 2026-09-10T01:57:17.907Z Record version: sha256:bbefe51b918369829d02c0b3f777eb233afb68ec1818f319968978cc15298e46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall continue to measure the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") subject to an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") in accordance with other Topics. Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:697bdf6c49be46ab0410979710b735b95a97e3eed7ea8dafedf1211aafd875b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/842/30/#35-subsequent-measurement) SEC content: no #### Sales-Type and Direct Financing Leases ##### [842-30-35-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:2526c2e49e3cc1cc6532240ed643454248a49a2f278badec6997bb1c398c3210 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall measure the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") by doing both of the following: 1. a Increasing the carrying amount to reflect the interest income on the net investment in the lease. A lessor shall determine the interest income on the net investment in the lease in each period during the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") as the amount that produces a constant periodic discount rate on the remaining balance of the net investment in the lease. 2. b Reducing the carrying amount to reflect the [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") collected during the period. ##### [842-30-35-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:664a2588399d84e5cf5148832b86652782dd941d352e7f5763452dcd37a77e86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the commencement date, a lessor shall not remeasure the net investment in the lease unless the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") is modified and that modification is not accounted for as a separate [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") in accordance with paragraph [842-10-25-8](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-8). ##### [842-30-35-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:a16acf3a9c7de0350271200fe4576baae338bd8df5d55a0ae09c88ccee4499f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall determine the loss allowance related to the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") and shall record any loss allowance in accordance with Subtopic 326-20 on financial instruments measured at amortized cost. When determining the loss allowance for a net investment in the lease, a lessor shall take into consideration the collateral relating to the net investment in the lease. The collateral relating to the net investment in the lease represents the cash flows that the lessor would expect to receive (or derive) from the [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") and the [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") during and following the end of the remaining [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."). ##### [842-30-35-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:5f355000002d442b54189a5646c97fbac9dff290a986e188b3c52e7cd2be2a62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") sells substantially all of the [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") associated with a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") and retains an interest in the [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."), the lessor shall not continue to accrete the unguaranteed residual asset to its estimated value over the remaining [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."). The lessor shall report any remaining unguaranteed residual asset thereafter at its carrying amount at the date of the sale of the lease receivable and apply Topic 360 on property, plant, and equipment to determine whether the unguaranteed residual asset is impaired. ##### [842-30-35-5](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:15de3493ae9ea102d32efd72cb96938376629be670f80247933e7bffe5f39732 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall reclassify the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") to the appropriate category of asset (for example, property, plant, and equipment) in accordance with other Topics, measured at the carrying amount of the net investment in the lease. The lessor shall account for the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") that was the subject of a [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") in accordance with other Topics. #### Operating Leases ##### [842-30-35-6](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:c9d35c69025e6fcf716ee5adaf3abc4f4f5d97caca1545af4e41ab25652e5ef3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall continue to measure, including testing for impairment in accordance with Section 360-10-35 on impairment or disposal of long-lived assets, the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") subject to an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") in accordance with other Topics. #### Subleases ##### [842-30-35-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:19.752Z to 2026-09-10T01:57:19.752Z Record version: sha256:2956b0091f3968d1c46481c080473b1ebed4c7fbdd99e547b5afa92eab4be35e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the original [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") enters into a [sublease](https://asc.understandingaccounting.org/glossary/s/#sublease "A transaction in which an underlying asset is re-leased by the lessee (or intermediate lessor) to a third party (the sublessee) and the original (or head) lease between the lessor and the lessee remains in effect.") or the original [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") agreement is sold or transferred by the original lessee to a third party, the original [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall continue to account for the lease as it did before. Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:90b84d1ec383120a1e6abc593d0bd050c2f711ffe35229ad7ca8d1322f8eb7e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/842/30/#40-derecognition) SEC content: no #### Sales-Type and Direct Financing Leases ##### [842-30-40-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:9201e60ff843034e0bbc9710374955d699c42006233540a8c99ddf3a2f9f93d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall derecognize the carrying amount of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") (if previously recognized) unless the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") is a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and collectibility of the [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") is not [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") (see paragraph [842-30-25-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3)). ##### [842-30-40-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:9fe379c8a5de3b1a7aa3f66e441e0a8a5859eaea4c160b1ad41d009021c5cbd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") is terminated before the end of the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall do all of the following: 1. a Measure the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") for credit losses in accordance with Subtopic 326-20 on financial instruments measured at amortized cost and record any credit loss identified 2. b Reclassify the net investment in the lease to the appropriate category of asset in accordance with other Topics, measured at the sum of the carrying amounts of the [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") (less any amounts still expected to be received by the lessor) and the residual asset 3. c Account for the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") that was the subject of the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") in accordance with other Topics. ##### [842-30-40-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:7bac69d76a58563924ff714d932b82c61272d960bf92681756b97291f4380946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the original [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") agreement is replaced by a new agreement with a new [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration."), the [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall account for the termination of the original lease as provided in paragraph [842-30-40-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-2) and shall classify and account for the new lease as a separate transaction. ##### [842-30-40-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:f67db80ef1135fd02adaef51905d1ce7ee2bf2db880c236bd326bb4a1d8b6636 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the acquisition of the residual value of an [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") by a third party, see paragraph [360-10-25-2](https://asc.understandingaccounting.org/asc/360/10/#360-10-25-2). Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:d8d7a65c63f608461ba7d9b696c2cbc0655f1dbcb1a8470e8ea902176f052795 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/842/30/#45-other-presentation-matters) SEC content: no #### Sales-Type and Direct Financing Leases ##### [842-30-45-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:e0d2f1ce3e9a028b576183c2f8a3d8036c7ee9881cf4f836c08f052d2343a0b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall present lease assets (that is, the aggregate of the lessor's net investment in [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.")) separately from other assets in the statement of financial position. ##### [842-30-45-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:4b414c1db85eb45cc88218313f309c68e1a6c0d84b1640ea650461a6f76f5a28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") assets shall be subject to the same considerations as other assets in classification as current or noncurrent assets in a classified balance sheet. ##### [842-30-45-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:c47b23efe1fc244708960bde7c13dd22f6fe5ccf6304920c44989b1a4137ac05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall either present in the statement of comprehensive income or disclose in the notes income arising from [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."). If a lessor does not separately present lease income in the statement of comprehensive income, the lessor shall disclose which line items include lease income in the statement of comprehensive income. ##### [842-30-45-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:108f7aa93df2dd682b86e3fd82b8edf993d623d69ce1824ba487859d64faf5a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall present any profit or loss on the lease recognized at the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date.") in a manner that best reflects the lessor's business model(s). Examples of presentation include the following: 1. a If a lessor uses leases as an alternative means of realizing value from the goods that it would otherwise sell, the lessor shall present revenue and cost of goods sold relating to its leasing activities in separate line items so that income and expenses from sold and leased items are presented consistently. Revenue recognized is the lesser of: 1. 1 The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") at the commencement date 2. 2 The sum of the [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") and any [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") prepaid by the [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration."). Cost of goods sold is the carrying amount of the underlying asset at the commencement date minus the [unguaranteed residual asset](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."). 2. b If a lessor uses leases for the purposes of providing finance, the lessor shall present the profit or loss in a single line item. ##### [842-30-45-5](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:077397d8a509ce286b6dbbc27523ba6f26c188e5d1d08d0ed4a3637d20c817a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the statement of cash flows, a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall classify cash receipts from [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") within operating activities. However, if the lessor is within the scope of Topic 942 on financial services—depository and lending, it shall follow the guidance in paragraph [942-230-45-4](https://asc.understandingaccounting.org/asc/230/942/#230-942-45-4) for the presentation of principal payments received from leases. #### Operating Leases ##### [842-30-45-6](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:c84ea8047f1d0bec0e775f1baad7cf678785482780ad6158d7be271ccb8d3e2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall present the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") subject to an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease.") in accordance with other Topics. ##### [842-30-45-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:26.511Z to 2026-09-10T01:57:26.511Z Record version: sha256:55508a5c923d05748cf9dc1a4c423383c883b3dc47866aa2c602b425feeb1efb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the statement of cash flows, a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall classify cash receipts from [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") within operating activities. Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:e228df121a0928ecf2d756a04943112ec1f5265567a8abd2096f0395c773eb4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/842/30/#50-disclosure) SEC content: no ##### [842-30-50-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:cd0ca2dcdba9aa1296775c9574284c162b93f047375247c622feacb0f3f77d24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of the disclosure requirements is to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."). To achieve that objective, a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall disclose qualitative and quantitative information about all of the following: 1. a Its leases (as described in paragraphs [842-30-50-3(a)](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-3), [842-30-50-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-4), and [842-30-50-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-7)) 2. b The significant judgments made in applying the requirements in this Topic to those leases (as described in paragraph [842-30-50-3(b)](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-3)) 3. c The amounts recognized in the financial statements relating to those leases (as described in paragraphs [842-30-50-5 through 50-6](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-5) and [842-30-50-8 through 50-13](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-8) ). ##### [842-30-50-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:e5dc9fb2442e748eeec81c01cf36d39d260ede15cfd12256081749d2ad106676 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements. A lessor shall aggregate or disaggregate disclosures so that useful information is not obscured by including a large amount of insignificant detail or by aggregating items that have different characteristics. ##### [842-30-50-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:aa48e9610ad6010b3ee3c9aef88ee51bd5457125f3250f278894df8220e1c7dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall disclose both of the following: 1. a Information about the nature of its leases, including: 1. 1 A general description of those leases 2. 2 The basis and terms and conditions on which [variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.") are determined 3. 3 The existence and terms and conditions of options to extend or terminate the lease 4. 4 The existence and terms and conditions of options for a [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") to purchase the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset."). 2. b Information about significant assumptions and judgments made in applying the requirements of this Topic, which may include the following: 1. 1 The determination of whether a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") contains a lease (as described in paragraphs [842-10-15-2 through 15-27](https://asc.understandingaccounting.org/asc/842/10/#842-10-15-2) ) 2. 2 The allocation of the consideration in a contract between lease and nonlease components (as described in paragraphs [842-10-15-28 through 15-32](https://asc.understandingaccounting.org/asc/842/10/#842-10-15-28) ), unless a lessor elects the practical expedient in paragraph [842-10-15-42A](https://asc.understandingaccounting.org/asc/842/10/#842-10-15-42A) and all nonlease components in the contract qualify for that practical expedient 3. 3 The determination of the amount the lessor expects to derive from the underlying asset following the end of the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."). ##### [842-30-50-3A](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-3A) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:73152543b452ad8319bf5be328c6083320b3b929068f191f717c6705cea38a88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that elects the practical expedient in paragraph [842-10-15-42A](https://asc.understandingaccounting.org/asc/842/10/#842-10-15-42A) on not separating nonlease components from associated lease components (including an entity that accounts for the combined component entirely in Topic 606 on revenue from contracts with customers) shall disclose the following, by class of underlying asset: 1. a Its accounting policy election and the class or classes of underlying assets for which it has elected to apply the practical expedient 2. b The nature of: 1. 1 The lease components and nonlease components combined as a result of applying the practical expedient 2. 2 The nonlease components, if any, that are accounted for separately from the combined component because they do not qualify for the practical expedient 3. c The Topic the entity applies to the combined component (this Topic or Topic 606). ##### [842-30-50-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:89b9f0b4a089724aa02a2e81108abf5c3d23c9478d2234efe44b580a1f65f816 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall disclose any lease transactions between related parties (see Topic 850 on related party disclosures). ##### [842-30-50-5](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:1ad1027c46eb00122c0e1372ee4c6a908a749d46ab140afc1ae2af43f4a615d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall disclose lease income recognized in each annual and interim reporting period, in a tabular format, to include the following: 1. a For [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."): 1. 1 Profit or loss recognized at the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date.") (disclosed on a gross basis or a net basis consistent with paragraph [842-30-45-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-45-4)) 2. 2 Interest income either in aggregate or separated by components of the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit."). 2. b For [operating leases](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease."), lease income relating to [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor."). 3. c Lease income relating to variable lease payments not included in the measurement of the [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."). ##### [842-30-50-6](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:a6755ec0c510daa73422e141c3572a17cf0c9078929f711b0b37dd55ac343b4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall disclose in the notes the components of its aggregate net investment in sales-type and direct financing leases (that is, the carrying amount of its lease receivables, its [unguaranteed residual assets](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."), and any deferred selling profit on direct financing leases). ##### [842-30-50-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:ca2b0908dbe7c3172ad1fb43a8e196c2c4c2eeafe9b5c86104e578e890595eee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall disclose information about how it manages its risk associated with the residual value of its leased assets. In particular, a lessor should disclose all of the following: 1. a Its risk management strategy for residual assets 2. b The carrying amount of residual assets covered by [residual value guarantees](https://asc.understandingaccounting.org/glossary/r/#residual-value-guarantee "A guarantee made to a lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount.") (excluding guarantees considered to be lease payments for the lessor, as described in paragraph [842-30-30-1(a)(2)](https://asc.understandingaccounting.org/asc/842/30/#842-30-30-1)) 3. c Any other means by which the lessor reduces its residual asset risk (for example, buyback agreements or variable lease payments for use in excess of specified limits). #### Sales-Type and Direct Financing Leases ##### [842-30-50-8](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:b944120d14edb4dc40649960b2ee3cce835741768ec225f9dfa08f4366f9e8ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to the disclosures required by paragraphs [842-30-50-3 through 50-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-3) , a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") also shall provide the disclosures in paragraphs [842-30-50-9 through 50-10](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-9) for [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."). ##### [842-30-50-9](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:1b7b73836f08842044dc424470d3138a6319e1d883304bae6ff274784219dba6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall explain significant changes in the balance of its [unguaranteed residual assets](https://asc.understandingaccounting.org/glossary/u/#unguaranteed-residual-asset "The amount that a lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") and deferred selling profit on direct financing leases. ##### [842-30-50-10](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:13d78fc95343961e49b2d3f87880ce453b23196fa82a7c533e9cb8861dc15085 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall disclose a maturity analysis of its [lease receivables](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis."), showing the undiscounted cash flows to be received on an annual basis for a minimum of each of the first five years and a total of the amounts for the remaining years. A lessor shall disclose a reconciliation of the undiscounted cash flows to the lease receivables recognized in the statement of financial position (or disclosed separately in the notes). #### Operating Leases ##### [842-30-50-11](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:43291e6f03ea740c5682c8d34252c4070a1820c5da94b9a8aed620b4f83a2885 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to the disclosures required by paragraphs [842-30-50-3 through 50-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-3) , a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") also shall provide the disclosures in paragraphs [842-30-50-12 through 50-13](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-12) for [operating leases](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease."). ##### [842-30-50-12](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:08ba1068c77c591987eded84121fd06fbf449fcb4b1a1de61fe2a4270941ee7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall disclose a maturity analysis of [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor."), showing the undiscounted cash flows to be received on an annual basis for a minimum of each of the first five years and a total of the amounts for the remaining years. A lessor shall present that maturity analysis separately from the maturity analysis required by paragraph [842-30-50-10](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-10) for [sales-type leases](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and [direct financing leases](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."). ##### [842-30-50-13](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:0459cf442b69021cfe2e80b4f64631b9fb1f66bec24b1189d1e6c6f3229a76ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor shall provide disclosures required by Topic 360 on property, plant, and equipment separately for [underlying assets](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") under operating leases from owned assets. #### Separating Components of a Contract ##### [842-30-50-14](https://asc.understandingaccounting.org/asc/842/30/#842-30-50-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:28.840Z to 2026-09-10T01:57:28.840Z Record version: sha256:2e2696f197ad2fcaeb50282a5daa957ccd7946987d7d6e4996808c315649defd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A lessor that makes the accounting policy election in paragraph [842-10-15-39A](https://asc.understandingaccounting.org/asc/842/10/#842-10-15-39A) shall disclose its accounting policy election and comply with the disclosure requirements in paragraphs [235-10-50-1 through 50-6](https://asc.understandingaccounting.org/asc/235/10/#235-10-50-1) . Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:9111149439b8af1a18c284ea760b2e3618daa686a92b7300437c03e8966a3e43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/842/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [842-30-55-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:da7ea3b74f9a0a9c7904f2596889dae66a73cd696db29ff31bcf42d63981a0ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the application of the provisions of this Subtopic in the following circumstances. A manufacturer sells equipment with an expected [useful life](https://asc.understandingaccounting.org/glossary/u/#useful-life "The period over which an asset is expected to contribute directly or indirectly to future cash flows.") of several years to end users (purchasers) utilizing various sales incentive programs. Under one such sales incentive program, the manufacturer contractually guarantees that the purchaser will receive a minimum resale amount at the time the equipment is disposed of, contingent on certain requirements. ##### [842-30-55-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:cc6811f55650c1c7e9ee483731827744c8a4912bfb129ea4c093190d28948b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The manufacturer provides the guarantee by agreeing to do either of the following: 1. a Reacquire the equipment at a guaranteed price at specified time periods as a means to facilitate its resale 2. b Pay the purchaser for the deficiency, if any, between the sales proceeds received for the equipment and the guaranteed minimum resale value. There may be dealer involvement in these types of transactions, but the minimum resale guarantee is the responsibility of the manufacturer. ##### [842-30-55-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:e8b277f901f7e3a3c0ea7f37b2c10c71c35bfed4baf5427a8b890e49b7a81352 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A sales incentive program in which an entity (for example, a manufacturer) contractually guarantees that it has either a right or an obligation to reacquire the equipment at a guaranteed price (or prices) at a specified time (or specified time periods) as a means to facilitate its resale should be evaluated in accordance with the guidance on satisfaction of performance obligations in paragraph [606-10-25-30](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-30) and the guidance on repurchase agreements in paragraphs [606-10-55-66 through 55-78](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-66) . If that evaluation results in a [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."), the manufacturer should account for the transaction as a lease using the principles of lease accounting in Subtopic 842-10 and in this Subtopic. ##### [842-30-55-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:cec55530303e9fdd49bf35ff4b981556a7c37737e58e8a1a0687324f52bdc902 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A sales incentive program in which an entity (for example, a manufacturer) contractually guarantees that it will pay a purchaser for the deficiency, if any, between the sales proceeds received for the equipment and the guaranteed minimum resale value should be accounted for in accordance with Topic 460 on guarantees and Topic 606 on revenue from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with customers. ##### [842-30-55-5](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:97cf7bae78db285dc01517ad132c02f41f3d2ab529230f42a1da4066bd60c0a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") used as part of the determination of whether the transaction should be classified as an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease."), a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A."), or a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") generally will be the difference between the proceeds upon the equipment's initial transfer and the amount of the [residual value guarantee](https://asc.understandingaccounting.org/glossary/r/#residual-value-guarantee "A guarantee made to a lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount.") to the purchaser as of the first exercise date of the guarantee. ##### [842-30-55-6](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:49c96d0cb73aaca32a1543da3c9bc264129a722e727431c5b66268101f1a78f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the transaction qualifies as an operating lease, the net proceeds upon the equipment's initial transfer should be recorded as a liability in the manufacturer's balance sheet. ##### [842-30-55-7](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:3b090c5a9263bfaf760cb2dbfa4d3db8f4fa21d0eedc00fa2f079b5b6d8e507a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability is then subsequently reduced on a pro rata basis over the period to the first exercise date of the guarantee to the amount of the guaranteed residual value at that date with corresponding credits to revenue in the manufacturer's income statement. Any further reduction in the guaranteed residual value resulting from the purchaser's decision to continue to use the equipment should be recognized in a similar manner. ##### [842-30-55-8](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:c7eea9dcd1d2861e180c1e88eed94148a33dad0abf1ac8119cd6df9b1c4d3775 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The equipment should be included in the manufacturer's balance sheet and depreciated following the manufacturer's normal depreciation policy. ##### [842-30-55-9](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:2673f42dff0c924794da094b061b38b9d425eb2fb43032cab7c941c1e40b62b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 on property, plant, and equipment provide guidance on the accounting for any potential impairment of the equipment. ##### [842-30-55-10](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:385045ed6dc2426e0dcbae893d4e3567d08b67bb3434ecd230df6d70cc313cc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the time the purchaser elects to exercise the residual value guarantee by selling the equipment to another party, the liability should be reduced by the amount, if any, paid to the purchaser. The remaining undepreciated carrying amount of the equipment and any remaining liability should be removed from the balance sheet and included in the determination of income of the period of the equipment's sale. ##### [842-30-55-11](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:7323317ecfa22f598c3b539b856e0f47c951e436955d1a30afbb77ce1b04fb07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Alternatively, if the purchaser exercises the residual value guarantee by selling the equipment to the manufacturer at the guaranteed price, the liability should be reduced by the amount paid to the purchaser. Any remaining liability should be included in the determination of income of the period of the exercise of the guarantee. ##### [842-30-55-12](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:bca360c3905bcbd232e211b26ff164bfa836101775f4d3a73fb5310b7a915317 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for a guaranteed minimum resale value is not in the scope of Topic 815 on derivatives and hedging. In the transaction described, the embedded guarantee feature is not an embedded derivative instrument that must be accounted for separately from the lease because it does not meet the criterion in paragraph [815-15-25-1(c)](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-1). ##### [842-30-55-13](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:3e975761408b75ff6c770c938e378b65c89f2b47a89e0e4b76b6fc303c86bc31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Specifically, if freestanding, the guarantee feature would be excluded from the scope of paragraph [815-10-15-59(b)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-59) because of both of the following conditions: 1. a It is not exchange traded. 2. b The underlying on which settlement is based is the price of a nonfinancial asset of one of the parties, and that asset is not readily convertible to cash. It is assumed that the equipment is not readily convertible to cash, as that phrase is used in Topic 815. ##### [842-30-55-14](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:953315166dde4ee2d91741f96c1650913231c0fcfc944ddb1f7454684594a966 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [815-10-15-59(b)(2)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-59) states that the related exception applies only if the nonfinancial asset related to the underlying is owned by the party that would not benefit under the contract from an increase in the price or value of the nonfinancial asset. (In some circumstances, the exclusion in paragraph [815-10-15-63](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-63) also would apply.) ##### [842-30-55-15](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:6c86a4f4764a7bca2dc79ae4c0fd7441a7e954451755adedca0074962ffdd979 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lastly, Topic 460 on guarantees does not affect the guarantor's accounting for the guarantee because that Topic does not apply to a guarantee for which the underlying is related to an asset of the guarantor. Because the manufacturer continues to recognize the residual value of the equipment guaranteed by the manufacturer as an asset (included in the seller-lessor's [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.")) if recording a sales-type lease, that guarantee does not meet the characteristics in paragraph [460-10-15-4](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) and is, therefore, not subject to the guidance in Topic 460. Additionally, if the lease is classified as an operating lease, the manufacturer does not remove the asset from its books, and its guarantee would be a market value guarantee of its own asset. A market value guarantee of the guarantor's own asset is not within the scope of Topic 460, and the guidance in paragraphs [842-10-55-32 through 55-33](https://asc.understandingaccounting.org/asc/842/10/#842-10-55-32) for an operating lease is not affected. As a result, the guarantor's accounting for the guarantee is unaffected by Topic 460. ##### [842-30-55-16](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:9d63e57ea48f323550744216cc6f6e851670b5497e87c82a1e6b83dd3850eb32 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Indemnification payments related to tax effects other than the investment tax credit should be reflected by the [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") in income consistent with the classification of the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."). That is, the payments should be accounted for as an adjustment of the lessor's [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") if the lease is a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") or recognized ratably over the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") if the lease is an [operating lease](https://asc.understandingaccounting.org/glossary/o/#operating-lease "From the perspective of a lessee, any lease other than a finance lease. From the perspective of a lessor, any lease other than a sales-type lease or a direct financing lease."). ##### [842-30-55-17](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:54df479960fd9d74fcda94ab20be11f114c8a5074d3f66f7077f01aaaa45b3c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic considers the right to control the use of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") as the equivalent of physical use. If the [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") controls the use of the underlying asset, recognition of [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") income in accordance with paragraph [842-30-25-11(a)](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-11) should not be affected by the extent to which the lessee uses the underlying asset. ##### [842-30-55-17A](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-17A) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:4ae1581372122617943e1c28b2ec654a0edfbbe213caedb9e272c3b356935dfa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notwithstanding the definition of [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."), if a lessor is not a manufacturer or a dealer, the fair value of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between the acquisition of the underlying asset and lease commencement, the definition of fair value shall be applied. #### Illustrations ##### [842-30-55-18](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:614d0b58b87697040b72ff2af5ba5d8cfda7d5be797cefed863a7ccb783a25f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 illustrates how a lessor would account for sales-type leases and direct financing leases. ##### [842-30-55-19](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:3917cdba2bd92d0647499f7a1bfda5e9f97891b5f89218767d5366e965b44b8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lessor enters into a 6-year lease of equipment with Lessee, receiving annual lease payments of $9,500, payable at the end of each year. Lessee provides a residual value guarantee of $13,000. Lessor concludes that it is probable it will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee. The equipment has a 9-year estimated remaining economic life, a carrying amount of $54,000, and a fair value of $62,000 at the commencement date. Lessor expects the residual value of the equipment to be $20,000 at the end of the 6-year lease term. The lease does not transfer ownership of the underlying asset to Lessee or contain an option for Lessee to purchase the underlying asset. Lessor incurs $2,000 in initial direct costs in connection with obtaining the lease, and no amounts are prepaid by Lessee to Lessor. The rate implicit in the lease is 5.4839 percent. ##### [842-30-55-20](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:ac9b823858eac2bfd2ef907d427a3b01eb98021d88247c932a43e9712b04840d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lessor classifies the lease as a sales-type lease because the sum of the present value of the lease payments and the present value of the residual value guaranteed by the lessee amounts to substantially all of the fair value of the equipment. None of the other criteria to be classified as a sales-type lease are met. In accordance with paragraph [842-10-25-4](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-4), the discount rate used to determine the present value of the lease payments and the present value of the residual value guaranteed by Lessee (5.4839 percent) for purposes of assessing whether the lease is a sales-type lease under the criterion in paragraph [842-10-25-2(d)](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-2) assumes that no initial direct costs will be capitalized because the fair value of the equipment is different from its carrying amount. ##### [842-30-55-21](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:32a9da9f58e97d7130fd61c383a8b2bb4a88f4bef61d9dd0ccb3e966056b30d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lessor measures the net investment in the lease at $62,000 at lease commencement, which is equal to the fair value of the equipment. The net investment in the lease consists of the lease receivable (which includes the 6 annual payments of $9,500 and the residual value guarantee of $13,000, both discounted at the rate implicit in the lease, which equals $56,920) and the present value of the unguaranteed residual value (the present value of the difference between the expected residual value of $20,000 and the residual value guarantee of $13,000, which equals $5,080). Lessor calculates the selling profit on the lease as $8,000, which is the difference between the lease receivable ($56,920) and the carrying amount of the equipment net of the unguaranteed residual asset ($54,000 - $5,080 = $48,920). The initial direct costs do not factor into the calculation of the selling profit in this Example because they are not eligible for deferral on the basis of the guidance in paragraph [842-30-25-1(c)](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-1) (that is, because the fair value of the underlying asset is different from its carrying amount at the commencement date). ##### [842-30-55-22](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:85f03601f74d1a9682dc6f36c9a9ddede1ed5822368969fdb8a4b4df2c4f4a71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the commencement date, Lessor derecognizes the equipment (carrying amount of $54,000) and recognizes the net investment in the lease of $62,000 and the selling profit of $8,000. Lessor also pays and recognizes the initial direct costs of $2,000 as an expense. ##### [842-30-55-23](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:a333b7b84a3593a9fa2e2a47b176637d6c5f4c497b884210c845b94e05202322 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 1, Lessor recognizes the receipt of a lease payment of $9,500 and interest on the net investment in the lease (the beginning balance of the net investment in the lease of $62,000 × the rate implicit in the lease of 5.4839% = $3,400), resulting in a balance in the net investment of the lease of $55,900. For disclosure purposes, Lessor also calculates the separate components of the net investment in the lease: the lease receivable and the unguaranteed residual asset. The lease receivable equals $50,541 (the beginning balance of the lease receivable of $56,920 - the annual lease payment received of $9,500 + the amount of interest income on the lease receivable during Year 1 of $3,121, which is $56,920 × 5.4839%). The unguaranteed residual asset equals $5,360 (the beginning balance of the unguaranteed residual asset of $5,081 + the interest income on the unguaranteed residual asset during Year 1 of $279, which is $5,081 × 5.4839%). ##### [842-30-55-24](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:ef80cd40c44b7e9b04145bbdd81efec7b886a300300427869df67c4865a42fe2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment. ##### [842-30-55-25](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:df09c5d4d8cb2e9e82debebd07c4006b585350aac13c10394cacd8da10ecc3ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts and circumstances as in Case A (paragraphs [842-30-55-19 through 55-24](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-19) ), except that it is not probable Lessor will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee. In reaching this conclusion, the entity observes that Lessee's ability and intention to pay may be in doubt because of the following factors: 1. a Lessee intends to make the lease payments primarily from income derived from its business in which the equipment will be used (which is a business facing significant risks because of high competition in the industry and Lessee's limited experience) 2. b Lessee has limited credit history and no significant other income or assets with which to make the payments if the business is not successful. ##### [842-30-55-26](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:58a0bc8fdf1385d111bee6d48bbeffcd312a9d875144009891f18cea32a6c747 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraph [842-30-25-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3), Lessor does not derecognize the equipment and does not recognize a net investment in the lease or any selling profit or selling loss. However, consistent with Case A, Lessor pays and recognizes the initial direct costs of $2,000 as an expense at the commencement date. ##### [842-30-55-27](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:d3bceffc7aa87d8fb622626e8c340def54eae1ace75898371885d9623c20d3f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 1, Lessor reassesses whether it is probable it will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee and concludes that it is not probable. In addition, neither of the events in paragraph [842-30-25-3(b)](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3) has occurred. The contract has not been terminated and Lessor has not repossessed the equipment because Lessee is fulfilling the terms of the contract. Consequently, Lessor accounts for the $9,500 Year 1 lease payment as a deposit liability in accordance with paragraph [842-30-25-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3). Lessor recognizes depreciation expense on the equipment of $7,714 ($54,000 carrying value ÷ 7-year useful life). ##### [842-30-55-28](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:3211cdaa35a6605c0f05f28c9201a05f06b147383eac88a867ef6a3e7df54986 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lessor's accounting in Years 2 and 3 is the same as in Year 1. At the end of Year 4, Lessee makes the fourth $9,500 annual lease payment such that the deposit liability equals $38,000. Lessor concludes that collectibility of the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee is now probable on the basis of Lessee's payment history under the contract and the fact that Lessee has been successfully operating its business for four years. Lessor does not reassess the classification of the lease as a sales-type lease. ##### [842-30-55-29](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:a48659a9b101f41c60a0f3fec35e49183ddd71dfd50f6022ed72a3a4d62b933a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consequently, at the end of Year 4, Lessor derecognizes the equipment, which has a carrying amount of $23,143, and recognizes a net investment in the lease of $35,519. The net investment in the lease consists of the lease receivable (the sum of the 2 remaining annual payments of $9,500 and the residual value guarantee of $13,000, discounted at the rate implicit in the lease of 5.4839 percent determined at the commencement date, which equals $29,228) and the unguaranteed residual asset (the present value of the difference between the expected residual value of $20,000 and the residual value guarantee of $13,000, which equals $6,291). Lessor recognizes selling profit of $50,376, the difference between (a) the sum of the lease receivable and the carrying amount of the deposit liability ($29,228 lease receivable + $38,000 in lease payments already made = $67,228) and (b) the carrying amount of the equipment, net of the unguaranteed residual asset ($23,143 - $6,291 = $16,852). ##### [842-30-55-30](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:f8a96e34e85323d11077a409f2631d1d4ef8fa53e631baaa2725db0393aadb65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After the end of Year 4, Lessor accounts for the remaining two years of the lease in the same manner as any other sales-type lease. Consistent with Case A, at the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment. ##### [842-30-55-31](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:8f523b81b5a3b5fda5e4a32cfaa75d9d324c42b3a0dcba5ddced117ef418b4ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts and circumstances as in Case A (paragraphs [842-30-55-19 through 55-24](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-19) ), except that the $13,000 residual value guarantee is provided by a third party, not by Lessee. Collectibility of the lease payments and any amount necessary to satisfy the third-party residual value guarantee is probable. ##### [842-30-55-32](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:bd1f185f370279abc7e1f1b94f97f822e6c44a143cc1a4d4ddff3cc5659017ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. None of the criteria in paragraph [842-10-25-2](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-2) to be classified as a sales-type lease are met. In accordance with paragraph [842-10-25-4](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-4), the discount rate used to determine the present value of the lease payments (5.4839 percent) for purposes of assessing whether the lease is a sales-type lease under the criterion in paragraph [842-10-25-2(d)](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-2) assumes that no initial direct costs will be capitalized because the fair value of the equipment is different from its carrying amount. ##### [842-30-55-32A](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-32A) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:f3c71c2fb627c3e9aee4e6d0b10fd9cf3e47857489cef0facd9a57ba5b99b2f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Rather, Lessor classifies the lease as a direct financing lease because the sum of the present value of the lease payments and the present value of the residual value guaranteed by the third party amounts to substantially all of the fair value of the equipment, and it is probable that Lessor will collect the lease payments plus any amount necessary to satisfy the third-party residual value guarantee. The discount rate used to determine the present value of the lease payments and the present value of the third-party residual value guarantee for purposes of assessing whether the lease meets the criterion in paragraph [842-10-25-3(b)(1)](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-3) to be classified as a direct financing lease is the rate implicit in the lease of 4.646 percent, which includes the initial direct costs of $2,000 that Lessor incurred. ##### [842-30-55-33](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:ee537a4b5b08078919d2906a51ece7a8d40d5209a98c862cd88dba5a72ed2b96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the commencement date, Lessor derecognizes the equipment and recognizes a net investment in the lease of $56,000, which is equal to the carrying amount of the underlying asset of $54,000 plus the initial direct costs of $2,000 that are included in the measurement of the net investment in the lease in accordance with paragraph [842-30-25-8](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-8) (that is, because the lease is classified as a direct financing lease). The net investment in the lease includes a lease receivable of $58,669 (the present value of the 6 annual lease payments of $9,500 and the third-party residual value guarantee of $13,000, discounted at the rate implicit in the lease of 4.646 percent), an unguaranteed residual asset of $5,331 (the present value of the difference between the estimated residual value of $20,000 and the third-party residual value guarantee of $13,000, discounted at 4.646 percent), and deferred selling profit of $8,000. ##### [842-30-55-34](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:c76f03dd0b3ff24d27f945874ebb04e0857ca87f5e970df89a0a0ad160e07e81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lessor calculates the deferred selling profit of $8,000 in this Example as follows: 1. a The lease receivable ($58,669); minus 2. b The carrying amount of the equipment ($54,000), net of the unguaranteed residual asset ($5,331), which equals $48,669; minus 3. c The initial direct costs included in the measurement of the net investment in the lease ($2,000). ##### [842-30-55-35](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:2d1e2264bf3c4e8f234132c4491422f294a1abb045f0bd541581f2b28b8f7d79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 1, Lessor recognizes the receipt of the lease payment of $9,500 and interest on the net investment in the lease of $4,624 (the beginning balance of the net investment in the lease of $56,000 × the discount rate that, at the commencement date, would have resulted in the sum of the lease receivable and the unguaranteed residual asset equaling $56,000, which is 8.258 percent), resulting in a balance in the net investment of the lease of $51,124. ##### [842-30-55-36](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:f515bafa5a3d70c8221ea6a292c2308c0a8721bc9db9be7dc464bbf0f308eddc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Also at the end of Year 1, Lessor calculates, for disclosure purposes, the separate components of the net investment in the lease: the lease receivable, the unguaranteed residual asset, and the deferred selling profit. The lease receivable equals $51,895 (the beginning balance of the lease receivable of $58,669 - the annual lease payment received of $9,500 + the amount of interest income on the lease receivable during Year 1 of $2,726, which is $58,669 × 4.646%). The unguaranteed residual asset equals $5,578 (the beginning balance of the unguaranteed residual asset of $5,331 + the interest income on the unguaranteed residual asset during Year 1 of $247, which is $5,331 × 4.646%). The deferred selling profit equals $6,349 (the initial deferred selling profit of $8,000 - $1,651 recognized during Year 1 \[the $1,651 is the difference between the interest income recognized on the net investment in the lease during Year 1 of $4,624 calculated in paragraph [842-30-55-35](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-35) and the sum of the interest income earned on the lease receivable and the unguaranteed residual asset during Year 1\]). ##### [842-30-55-37](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:116c0d0f62a94afb73ec5795d23e6b9feac092d49a9eaaaaa282287109bd67c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 2, Lessor recognizes the receipt of the lease payment of $9,500 and interest on the net investment in the lease (the beginning of Year 2 balance of the net investment in the lease of $51,124 × 8.258%, which is $4,222), resulting in a carrying amount of the net investment in the lease of $45,846. ##### [842-30-55-38](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:91ca71a2bac7f7371381f0a98e488b390f2532e94be5cd39528e29cc81403a1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Also at the end of Year 2, Lessor calculates the separate components of the net investment in the lease. The lease receivable equals $44,806 (the beginning of Year 2 balance of $51,895 - the annual lease payment received of $9,500 + the interest income earned on the lease receivable during Year 2 of $2,411, which is $51,895 × 4.646%). The unguaranteed residual asset equals $5,837 (the beginning of Year 2 balance of the unguaranteed residual asset of $5,578 + the interest income earned on the unguaranteed residual asset during Year 2 of $259, which is $5,578 × 4.646%). The deferred selling profit equals $4,797 (the beginning of Year 2 balance of deferred selling profit of $6,349 - $1,552 recognized during Year 2 \[the $1,552 is the difference between the interest income recognized on the net investment in the lease during Year 2 of $4,222 and the sum of the interest income earned on the lease receivable and the unguaranteed residual asset during Year 2\]). ##### [842-30-55-39](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:d0a0832e17b0fb7c71c095b2842616990e6ad6a18deed877edbfb2cc0ad71c65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment. ##### [842-30-55-40](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:159c9f9cb5b5aeae3a69e95aca348c9f6d5ec66b4d5e10e684a23c3cbf329f2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the same facts and circumstances as Case C (paragraphs [842-30-55-31 through 55-39](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-31) ), except that collectibility of the lease payments and any amount necessary to satisfy the residual value guarantee provided by the third party is not probable and the lease payments escalate every year over the lease term. Specifically, the lease payment due at the end of Year 1 is $7,000, and subsequent payments increase by $1,000 every year for the remainder of the lease term. Because it is not probable that Lessor will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by the third party in accordance with paragraph [842-10-25-3](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-3), Lessor classifies the lease as an operating lease. ##### [842-30-55-41](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:3878fa6f26e9f364a75e01b81c0f08a313891d5d705dd96532abf29cb9f63277 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Lessor continues to measure the equipment in accordance with Topic 360 on property, plant, and equipment. ##### [842-30-55-42](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:41e3640d1ea4da9e253da986c49a6eb5c642b8a6fc792564641a6526d161c61f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because collectibility of the lease payments is not probable, Lessor recognizes lease income only when Lessee makes the lease payments, and in the amount of those lease payments. Therefore, Lessor only recognizes lease income of $7,000 at the point in time Lessee makes the end of Year 1 payment for that amount. ##### [842-30-55-43](https://asc.understandingaccounting.org/asc/842/30/#842-30-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:30.582Z to 2026-09-10T01:57:30.582Z Record version: sha256:d287a5288690734cb3c3dd98c839f432683767cb0ccb8069297eef52e8f788cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 2, Lessor concludes that collectibility of the remaining lease payments and any amount necessary to satisfy the residual value guarantee provided by the third party is probable; therefore, Lessor recognizes lease income of $12,000. The amount of $12,000 is the difference between lease income that would have been recognized through the end of Year 2 ($57,000 in total lease payments ÷ 6 years = $9,500 per year × 2 years = $19,000) and the $7,000 in lease income previously recognized. Collectibility of the remaining lease payments remains probable throughout the remainder of the lease term; therefore, Lessor continues to recognize lease income of $9,500 each year.